Back in November, when he was looking to build support for his budget, Mayor Daley promised voters he’d be on their side come spring, fighting in Springfield to extend the so-called cap on rising property taxes. But when the vote came on May 3, Daley was in the Middle East, far from the legislative fray and of no help in defending the bill, which was soundly defeated. Meanwhile, house speaker Michael Madigan voted for the measure while playing a passive role in its defeat.
As Barb Head, cofounder of the Tax Reform Action Coalition, a citywide group, puts it: “The bottom line is you’re going to pay more–way more–in property taxes. We’re all screwed.”
To understand the issues involved in this latest go-round, it’s helpful to know a thing or two about our needlessly complicated property tax system. Explained in its simplest form, your property tax is figured by multiplying the tax rate (6.28 percent) against the value of your home, which is determined by Cook County assessor James Houlihan, minus an exemption–formerly $4,500. So if the assessor puts the value of your property at $100,000, you subtract $4,500 and multiply that total, $95,500, by 6.28 percent, leaving you with a tax bill of $5,997.
Of course, your home’s value doesn’t remain the same year after year. Every three years Houlihan’s number crunchers reassess property values by reviewing property sales throughout the county. If they determine that your property has doubled in value, from $100,000 to $200,000, you’ll wind up paying $12,277 in taxes, a 104 percent increase.
In a sneaky sort of way, reassessment helps elected officials like Daley and the city council pretend they’re keeping taxes down: the tax rate stays roughly the same year after year, while rising assessments do the dirty work of making sure you pay more. In its last budget statement, for instance, the city bragged that “the 2006 budget contains no increase in the property tax for the third year in a row. Since 1989, Mayor Daley has held any increase in city property taxes to an average of about one percent a year, which is well below the rate of inflation. Holding the line on property taxes increases government efficiency and keeps Chicago neighborhoods affordable for residents.” In reality, property taxes have gone up dramatically since 1989, one reason many longtime residents in gentrifying neighborhoods have been forced to leave their homes.
In 2003 Houlihan himself stepped in to try and fix the problem of rising assessments, proposing a state law that would cap all reassessment increases at 7 percent per each three-year period. Under Houlihan’s plan, if your home was assessed at $100,000, its reassessment value would be capped at $107,000. Your taxes would rise from $6,280 to $6,719–$5,558 less than what you’d pay if your assessment had doubled without the cap.
Houlihan’s proposal put Daley in a bind. He didn’t want to look unsympathetic to besieged taxpayers, but he couldn’t afford to lose the revenues that unfettered reassessments bring in. For better or worse, the city is hooked on property taxes, which pay for schools and parks and pensions and almost all the city’s capital budget. Just as important, property tax revenues fund the city’s 140-plus tax increment financing districts, the piggy banks Daley needs to keep his aldermen content. So Daley, Madigan, and state senate president Emil Jones stitched together a cockamamie alternative. Instead of capping assessments, they proposed “capping” property taxes by raising the home owner’s exemption to $20,000 for a period of three years. Going back to our example, a home owner whose property was reassessed at $200,000 would wind up paying $11,304 in property taxes–considerably more than what he’d pay under Houlihan’s proposal, but a savings of almost $1,000 from what he would have paid without the increased exemption.
The revised plan, passed in the spring of 2004 and signed into law that summer by Governor Blagojevich, was flawed. It gave no protection to commercial property owners, many of whose taxes rose considerably. Nor did it offer much relief for home owners in neighborhoods like Edgewater, North Center, and Bronzeville, where some assessments soared so high the exemption was no real help. In effect the change didn’t so much cut property taxes as shift the burden of paying them: roughly 20 percent of the city’s taxpayers wound up paying increases of more than 50 percent. Moreover, the plan was always a sunset provision–it expires next year.
In March the senate passed a measure that would have raised the exemption to $60,000 for the next three years. But the bill stalled in the house. “I know this is not a perfect piece of legislation,” says state rep John Fritchey, one of the house’s chief sponsors of the bill. “But we have to do something. We can’t have people having to sell their homes ’cause they can’t pay their taxes.”
Publicly, Madigan, who controls the house, was silent on the bill as it came up for a vote, offering neither support nor opposition. Daley likewise took no stand in the debate. In the absence of strong leadership from Daley or Madigan, reps were free to vote as they pleased, and the measure fell far short of the 60 votes it needed for passage (there were 37 votes for, 69 against, and 6 votes of present). Downstate reps, both Democrats and Republicans, largely voted against it, suspicious of any proposal that would offer tax breaks for Chicago. State rep Dan Burke, the brother of 14th Ward alderman Ed Burke, voted against it. And none of the city’s black state reps, who for the most part represent impoverished communities on the south and west sides, voted for it.
Ken Dunkin, whose district stretches from Cabrini-Green to the near south side, says he voted against the bill because it doesn’t provide enough protection for those who don’t own their homes: large apartment units are considered commercial property, and tax increases get passed on to tenants. “That bill has a disproportionate impact on renters on the south side,” he says. His explanation, like the votes of the other black reps, leaves many observers baffled. Despite the bill’s flaws, it did offer relief for home owners in neighborhoods like Englewood, Bronzeville, South Shore, Woodlawn, and Lawndale, who will get clobbered if the exemption reverts to $4,500.
“You’d think they’d vote for it just out of political self-interest,” says one northwest-side rep. “I don’t know if a lot of legislators understand the bill–I don’t know who they’re listening to. I do know they’ll be howling like everyone else when they get their reassessment notices.”
For the record, no one’s fooled by Madigan’s vote in favor of the bill. “Of course he voted for it–his constituents would have lynched him if he hadn’t,” says the legislator with a laugh. “Why not vote for it? He knew it was going to lose.”
Most legislative insiders think Daley and Madigan are playing a wait-and-see game on the issue. If the citizenry rises up angry as reassessment notices come out, Daley and Madigan will probably back some sort of cap or increased exemption come fall–just in time for the mayor’s reelection campaign.
Fritchey predicts the bill will pass in November’s veto session. And Head vows to keep the heat on. “We’re going to have a rolling revolt,” she says. “As assessment notices come out, we will ask people to make copies and send them to their elected officials, including the mayor, the aldermen, and the state reps. We’ll keep up the pressure all summer long.”
Art accompanying story in printed newspaper (not available in this archive): photos/AP Photo/Seth Perlman, Jon Randolph.